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Connectionist-based rules describing the pass-through of individual goods prices into trend inflation in the United States

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  • Anderson, Richard G.
  • Binner, Jane M.
  • Schmidt, Vincent A.

Abstract

This paper examines the inflation “pass-through” problem in American monetary policy, defined as the relationship between changes in the growth rates of individual goods and the subsequent economy-wide rate of growth of consumer prices. Initial relationships are established with Granger causality tests robust to structural breaks. A feedforward artificial neural network (ANN) is used to approximate the functional relationship between selected component subindexes and the headline CPI. Moving beyond the ANN “black box”, we illustrate how decision rules can be extracted from the network.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 1 ()
Pages: 174-177

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:174-177

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Consumer prices; Inflation; Neural network; Data mining; Rule generation;

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References

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  3. Richard G. Anderson & Jane M. Binner & Vincent A. Schmidt, 2011. "Connectionist-based rules describing the pass-through of individual goods prices into trend inflation in the United States," Working Papers 2011-007, Federal Reserve Bank of St. Louis.
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  15. Khurshid Kiani & Terry Kastens, 2008. "Testing Forecast Accuracy of Foreign Exchange Rates: Predictions from Feed Forward and Various Recurrent Neural Network Architectures," Computational Economics, Society for Computational Economics, vol. 32(4), pages 383-406, November.
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Cited by:
  1. Richard G. Anderson & Jane M. Binner & Vincent A. Schmidt, 2011. "Connectionist-based rules describing the pass-through of individual goods prices into trend inflation in the United States," Working Papers 2011-007, Federal Reserve Bank of St. Louis.

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